AM Best affirmed the financial strength rating of A- (Excellent) and the issuer’s long-term credit rating of “a-” (Excellent) from National Guaranty Insurance Company of Vermont (NGIC) (Burlington, VT). The outlook for these Credit Ratings (ratings) is stable.
The ratings reflect the strength of NGIC’s balance sheet, which AM Best assesses as very strong, as well as its strong operational performance, limited business profile and appropriate management of business risks.
The ratings also reflect NGIC’s strategic role as the captive insurance company of Waste Management, Inc. (WM) WM, one of North America’s leading providers of comprehensive environmental waste management services. As a strategic and integral part of WM’s enterprise risk management program, the parent company fully funded the capitalization of the captive in the form of a demand note which generates net investment income to increase the annual surplus. Other supplements were provided in the form of letters of credit when warranted by changes in exposures. NGIC benefits from WM’s strong risk management strategies, which enable it to effectively and appropriately support part of WM’s financial assurance program. The company did not experience any losses under the program, but its expense ratio compares unfavorably to the surplus lines composite due to the nature of the financial assurance line of business and the expense focused on risk mitigation. Nevertheless, the company has been able to significantly reduce underwriting costs over the past five years to benefit more from operating profit and net income.
The stable outlook reflects AM Best’s expectation that the company will maintain its strong balance sheet and strong operating performance through active risk identification and assessment strategies.
AM Best remains the leading rating agency for alternative risk transfer entities, with more than 200 such vehicles rated in the United States and around the world. For current Best credit ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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